Direct & Integrated Marketing Roundtable

Wednesday, March 25, 2009

YouTube is sugar and spice and everything nice

Piper Jaffrey analyst Gene Munster conducted a study in February, 2009 and determined that YouTube is selling more in-stream advertising on more videos and attracting many new and substantial advertisers.

According to Rory Maher of paidcontent.org Munster surveyed the top 100 videos on YouTube for one week during the month of February and determined:

  • 72 percent of the ads displayed were in-video ads versus 52 percent in January and 63 percent in December.
  • New advertisers on the site included Verizon, Adidas, Xbox, Disney, Kraft, and Chevy – yes you heard it right Disney is now on YouTube!

Obviously since in-video ads typically have a higher CPM than the ordinary cost-per-click network ads, it represents some additional revenue for YouTube.

So why did it take so long to see YouTube become more aggressive in it’s advertising efforts? I am not sure whether the wait was intentional or not, but it definitely served a couple of very important purposes:

  • The wait allowed advertisers to become more comfortable with YouTube and how advertising would and could work within this environment.
  • Additionally, YouTube’s reluctance to pursue an aggressive advertising policy in its infancy got us, the users, even more hooked and therefore less likely to put up a fuss when being shown an increase in advertisements.

Again, was this wait intentional or not on the part of YouTube? You decide.

For YouTube, they have been slowly integrating in-stream advertising to the viewers to ensure we are okay with this practice for some time. They actually began in-streaming advertising in August of 2007. Initially ads were to show up no earlier than 10 to 15 seconds into the video and were only placed on videos made by content partners. A very smart idea...slowly integrating more and more ads into the mix within a controlled environment.

And now I just read they are testing bigger homepage ads – masthead ads across the top of the page. http://adage.com/digital/article?article_id=135449

I say to YouTube, go ahead and make some money. You have earned it. After all where else can you or I see so much video content for free and upload some of my own videos to share with others? No place that I know of.

Hey, If Disney is ready to advertise on YouTube, then everything must be sugar and spice and everything nice.


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